Research article

The Alpine market in the European housing context

A strong Swiss franc has made Swiss property expensive to foreign buyers. A weaker euro poses buying opportunities.

The residential markets of Alpine resorts are driven first and foremost by second home purchasers and investors, but are also influenced by national trends. To fully understand their drivers therefore, it is necessary to examine the underling market in the country that shape them.

Although originating in the USA, the North Atlantic debt crisis was amplified in Europe by the subsequent severe impacts on its housing markets. Some of the more buoyant markets in recent years have been non-euro denominated (namely the UK and Switzerland), benefiting from their position outside the Eurozone, although their performance has since diverged.

Figure 4

FIGURE 4National house price performance: key Alpine markets vs UK

Source: OeNB, Statistik, SNB, Land Registry, INSEE, Savills World Research

Figure 5

FIGURE 5GDP growth forecast: key Alpine markets vs UK

Source: Savills World Research, Oxford Economics


Switzerland’s residential market has seen steady growth during the last seven years. Safe-haven fundamentals and prudent economic management underpinned demand in a supply constrained residential market. But last year has seen the market slow. In January of 2015 the Swiss franc was decoupled from the euro, appreciating against other leading currencies.

This has made Swiss property more expensive for foreign purchasers (see The Impact of Currency below).

The costly franc has led to a fall in exports, contributing to a cooling of the Swiss economy. Low population growth is forecast. The country’s strict citizenship system coupled with the recent Lex Weber initiative (see Switzerland – Policy and planning trends) will serve to restrict foreign investment. Together, we anticipate price falls at a national level in the medium term.


Austria witnessed a period of exceptionally strong residential price growth at a time when many other Eurozone markets were falling. At the national level, prices have increased by 41% since 2008, compared to falls of 0.9% in France over the same period. Residential markets were driven by record low interest rates, and supported by low levels of unemployment in a resilient domestic economy.

The market has since slowed, with prices appreciating by just 1.2% in the year to Q1 2015. Vienna, which had led price growth, has since slowed too. The city’s prime markets are driven in part by foreign buyers, particularly those from Eastern Europe and the CIS. Economic sanctions in Russia and ongoing troubles in Ukraine have contributed to a decline in transactions at the top end of the market.

The market is a rental one (41.5% of the households rent their home), and rents continue to rise – average rents plus running costs are up 29% since 2008.


The French residential market ‘double-dipped’, recovering to a 2011 peak within two years, but has followed a downward trend since. While prices remain suppressed, transaction levels across France have rallied 35% from a 2009 low, spurred by record low mortgage rates.

Challenges lie ahead in consolidating public finances, improving competitiveness and reducing unemployment. Weak economic growth is forecast, which will bear down on the country’s real estate markets, although a change of rhetoric in President Hollande’s policies toward the wealthy has helped the prime sector.


The Impact of Currency

Swiss franc strengthens while the euro declines

The Swiss franc has long been considered a safe haven currency, and high volumes of foreign buying during the Eurozone crisis led the Swiss National Bank to introduce a cap on its value against the euro. In January of 2015 this cap was removed, and the Swiss franc quickly appreciated, making Swiss property more expensive for non-CHF denominated purchasers. Conversely, it has made selling more profitable for non-resident vendors.

The euro, meanwhile, has depreciated against major currencies since 2014, including the US dollar and UK pound. The ECB’s quantitative easing program, anticipated US interest rate rises in the medium term, along with the Greek crisis, have all contributed to the euro’s decline. This makes French and Austrian property cheaper to both USD and GBP buyers, down more than 6% in currency terms.

Figure 6

FIGURE 6Worked examples

Source: Savills World Research

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